Issues Involved in Contract Manufacturing

Issues Involved in Contract Manufacturing

The following Q&A was conducted with several industryexecutives who commented on the benefits of contract manufacturing, as well asthe issues that are involved in light of increased homeland security and thepending federal GMPs.

What are the most common reasons yourcustomers choose to work with a contract manufacturer?

Gary Bennett, marketing manager, National Enzyme Co.:There are a number of reasons to work with a contract manufacturer. Using theservices of a custom manufacturer relieves you of the great financialresponsibility of acquiring and maintaining a manufacturing facility, cost ofequipment and personnel, or large insurance premiums, not to mention theincreasing role of government and regulations being implemented. The mainbenefit of using a contract manufacturer is that it allows you, the marketingcompany, to do what you do best: market and sell products.

M. Amirul Karim, president, NHK Laboratories Inc.: Ourcustomers use a contract manufacturer because it makes operational and economicsense. They don't want the headache of owning and operating a manufacturingfacility, so they partner with companies like us instead.

Jay Kaufman, president, Paragon Laboratories: The mostcommon reasons include that the customer's expertise is limited to the marketingof dietary supplements, not the manufacturing of dietary supplements. Even ifsomeone does have the capability to manufacture dietary supplements, they maynot have the expertise to manufacture a particular type of supplement, or it maynot be economical for them to manufacture the supplement in question.

Robin Koon, vice president of sales and marketing, BestFormulations: There are two primary reasons our customers choose to use acontract manufacturer: 1) they do not manufacture any products at all and needsomeone to make it; and 2) they are a manufacturer but are unable to producesome specific item that we are able to make (i.e., softgels).

Jerry Rayman, vice president of sales and marketing, PALLaboratories Inc.: The most common reason is probably flexibility--the factthat they can take advantage of our resources instead of investing themselves,and as a result, they can be flexible in the delivery systems that they use fortheir products. And, our customers can avoid going through the expense ofchanging formulas--that becomes our expense.

Michael Schaeffer, president and chief operating officer,Pacific Nutritional Inc.: The primary reason for using a contractmanufacturer to produce dietary supplements is a fixed inventory cost/price fora wholesale/distribution/marketing company. Contract manufacturers absorb allvariable costs in the product related to material sampling, formulationoverages, production loss, and laboratory tests for stability and qualityassurance.

Tina Seals, marketing specialist, Capsugel: There are avariety of reasons our clients choose to secure contract manufacturing services.With traditional two-piece gelatin and vegetarian capsules, customers sometimesencounter difficult-to-fill (sticky) compounds. In order to increaseproductivity, they seek out assistance from contract fillers. Other reasonsdietary supplement companies outsource some of their manufacturing needs arerelated to seasonal or unexpected spikes in demand, which do not support capitalinvestment in manufacturing equipment. Other clients realize they have notoptimized manufacturing operations and, stated quite simply, the overall cost ofgoods is cheaper when outsourced.

Capsugel also offers in-house formulation and manufacturingsupport for our Licaps product line, developed specifically for liquid andsemi-solid formulations. Clients commonly seek out our services for developmentof liquid and semi-solid compounds because our technology, when compared toother liquid technologies, frequently drives product to market much more quicklyand offers the allure of unique product positioning for the marketplace.

Greg St. Clair, vice president of sales and marketing,Arizona Nutritional Supplements: The most common reason is customers aremarketing entities, not manufacturers. They know how to sell and market, whereasit is our business to manufacture for them. Another reason is the seed capitalor investment to build a facility with the proper equipment and staff, and thenservice and maintain with GMP status and quality always in mind.

Jeffrey A. Stallings, president, Merical Vita-Pak: Ourcustomers choose Merical Vita-Pak because we offer packaging expertise andeconomies that they could never achieve on their own. We possess uniqueequipment and human capital that our customers can't easily replicate.

Ron Udell, president, Soft Gel Technologies Inc.: Manytimes, our customers are looking to create unique specialty products that can'tbe bought off of shelves. Whereas many manufacturers will offer commodity codeproducts with standard and readily available formulas, a contract manufacturerwill give the client the opportunity to create something uniquely theirs.

Fred Wehling, president, Amerilab Technologies Inc.:Typical customers for a contract manufacturer are broken into four categories:1) the customer who does not manufacture finished products at all, and only isinterested in the marketing of a given product; 2) the customer has capabilitiesof manufacturing several dosage forms but lacks the technology for a specifictype of product, and is unwilling to invest the time, equipment and opportunitycosts associated with learning a technology that is currently not part of theirinternal expertise; 3) the customer simply does not have the capacity to producethe quantities of product needed for ongoing sales, or wants a second source asa buffer for increased capacity; and 4) the customer is interested in a productthat is only available through a license, due to patents or trade secrettechnology that the contract manufacturer holds.

Greg Williford, vice president of sales and client services,Vita Tech: I think probably just bullet points: quality, price, reliability.In this evolving regulatory environment, you simply have to have confidence inthe people you work with as far as their ability to keep you safe, to be a layerof protection between you and people who want to get you. So, at least as far aswe're concerned, that is a very important point with our clients: They simplyhave to have confidence in our ability to make a product that is going to be aswe say it is.

Rezaur R. Yousuf, director of business operations, KabcoPharmaceuticals Inc.: The customer can avoid the high cost of capitalexpense involved in setting up a manufacturing facility, gains access to customformulation and has access to a quality finished product supported by alltechnical documentation.

What are the benefits of hiring a contractmanufacturer?

Karim: There are several benefits to outsourcingmanufacturing. To construct and operate a GMP-compliant manufacturing plantcosts several million dollars. In addition to the capital expense of buildingsand equipment, you must employ qualified personnel, which becomes a costlyoperational cost. By hiring a contract manufacturer, you get all the benefits ofa manufacturing plant but pay a fraction of these costs.

Kaufman: It allows the marketers the benefit ofconcentrating their limited resources on marketing finished products toconsumers. These resources include both time and money. Additionally, thecontract manufacturers' vast experience with developing different finishedproducts may allow for a quicker start-up of introducing a new product tomarket.

Mitchell M. May, Ph.D., chief executive officer, SynergyProduction Laboratories: When you hire a contract manufacturer, you arehiring expertise and equipment. The contract manufacturer has already made theinvestment in training and equipment, and focused its resources on theproduction process. This allows contract manufacturers to have a greater levelof expertise than most manufacturers.

Rayman: Gaining the expertise without having to hire ityourself. Expertise in formulation, expertise in manufacturing.

Schaeffer: For brand-new companies, the advantagesinclude utilizing the expertise of the contract manufacturer for productdevelopment and packaging design. For companies that are two to three years old,the advantages include assistance in refining formulations to improve productintegrity. For older companies, the advantages include the coordination ofcontractual deliveries of products.

The secondary advantage of using a contract manufacturer is toutilize the volume purchasing power of the manufacturer. Since the contractmanufacturer produces products for numerous companies, the manufacturer'sability to receive lower material costs is greater than what most companies canreceive if purchased directly.

Seals: To increase productivity, to support seasonal orunexpected spikes in market demand and to reduce investment in capital equipmentinvestment for companies that may not have optimized manufacturing operationsinternally.

Josh Seow, sales representative, Tradimex Equipment &Supply Inc.: A customer can benefit from using a contract manufacturer ifthe contract manufacturer has a clean, organized and well-managed facility, usesGMPs in each department, and is willing comply with all FDA rules. This givescustomers a chance to focus on selling their product. When their sales are upand money is coming in, customers can then look to buy a few pieces of equipmentand slowly start into manufacturing while still using a contract manufacturer tokeep the product moving.

St. Clair: When you hire a contract manufacturer, youeliminate your concern about overhead and all the business aspects ofproduction. Those aspects can become quite expensive and cumbersome.

Stallings: Customers are better able to focus their timeand resources on marketing their products, while Merical Vita-Pak can engineer afilling or packaging system that makes the best economic sense. It creates awin-win situation where both organizations can work to their strengths.

Udell: The ability to work in concert with the marketerto come up with something special. With such a crowded field of supplementre-sellers, the company that sets itself apart is the company that creates newmarketing avenues and new growth opportunities.

Wehling: Typically, a contract manufacturer shouldprovide: 1) shorter lead times; 2) an extension of capacities; and 3) expertisein quickly developing a product and placing it into production. In addition, thecustomer does not have to invest in equipment, personnel, warehousing or rawmaterial inventories.

Yousuf: Customers can selectively choose products basedupon their marketing needs without incurring R&D cost. Most contractmanufacturers do R&D for reliable and steady customers. The responsibilityof the product's quality lies on the contract manufacturer and, therefore, thecustomer has the ease of mind. A good manufacturer will only choose qualityingredients to make the products and, therefore, not compromise on quality.

What are some common misconceptions regardinga contract manufacturer's capabilities?

Bennett: That all contract manufacturers are the same,and that they all operate and offer the same service. Also, that all contractmanufacturers are cGMP-certified and have the same level of quality control.

Kaufman: One issue that comes to mind is: What is theextent of their quality control capabilities? Do they have an in-houselaboratory that provides analysis to confirm the quality of raw materials andthe content of the finished product, or do they just accept the raw material asit is labeled and compound the product from there, hoping the finished productturns out right?

Koon: They are too expensive; they use the cheapest rawmaterials; they don't have R&D; they don't test products; you can't trustthem. These, of course, are not really accurate. There are all kinds ofmanufacturers.

Rayman: I don't know that there are any misconceptions,not for a quality contract manufacturer. We should be able to do everything forour customer. We try, personally, to be a turnkey operation for our customers.

Schaeffer: The most common misconception is the amount oftime required to produce a product. It is often overlooked that contractmanufacturers need time to acquire components, process quality controlanalytical data (i.e., microbiological results, potency, purity), and processand inspect the product. Other misconceptions include: it is often thought thatif one facility can produce the product, all facilities can produce the product,and that the marketing companies' technical department can always produceformula specifications that can be manufactured and/or taste to theirsatisfaction.

Seow: Taking a customer's formulas or not being able toprovide all the services that their customer may need. For example, if thecontract manufacturer is filling just capsules for the customer and now thecustomer has a formula they want put into a tablet. Customers should first seeif the contract manufacturer they are using want to buy a tablet press andcontinue to work with the customers. The contract manufacturer wants to grow andincrease their production volume like any other business.

St. Clair: The biggest misconception surrounding acontract manufacturer's capabilities is that most customers assume we carry orhave our own line of products, which we do not.

Stallings: Most customers believe that the only advantagecontract packagers have is in their equipment. This is not true--a contractpackagers' real value is in its experience and efficiencies in packaging avariety of products.

Udell: A common misconception is that because a productmay look the same and come from the same facility, that it is in fact an equalproduct. The truth is that the added value of manufacturing something specialwith novel ingredients and/or delivery systems can overcome the shortcomingsthat a client may not see in a commodity product.

Also, in our business of manufacturing softgels, the most commonmisconception we come up against is that anything can be encapsulated into asoft gelatin capsule. The fact of the matter is that some things are just notdo-able in a softgel format. Our job as a manufacturer is to research and adviseour clients on whether or not a softgel is the right delivery method for theirproduct.

Wehling: Some misconceptions I have experienced withcompanies include: 1) that we have much less knowledge and expertise than weactually have; 2) that we will copy a product that has been developedspecifically for one of our customers, and sell it to them directly; 3) that wehave the ability to do very small production runs on products for a veryinexpensive price; and 4) that we have unlimited amounts of time for developmentof new products specifically for them.

Williford: I think some misconceptions surround leadtimes. Some customers think you can build these things in a couple of weeks andhave it out the door as a custom product. Most manufacturers have a couple ofareas of expertise; there aren't too many of them that do softgels, powders,liquids, ointments and all the packaging. So, sometimes we get calls from peoplewho believe we do everything under the sun, but that is not normally the case.

Yousuf: Many think that it is very easy to set up amanufacturing facility and that manufacturing tablets and capsules is an easyjob. There is a whole process to it that involves the best of coordinationbetween several departments. There are several stages involved in themanufacturing of a product, and the whole chain has to be extremely well linked.The simplest of mistakes can lead to a disaster. Most customers do notunderstand the various steps involved in the operation.

Are you currently operating under GMPs, andhow do you think the impending federal GMPs will affect your business?

Bennett: Yes we are, and have been for the past 20 years.In November, National Enzyme Co. received its NSF GMP status. The federal GMPswill help the industry.

Karim: NHK Laboratories has been NNFA GMP certified since2001. In addition, we have just completed construction on our newstate-of-the-art packaging and laboratory facility, which was designed to be adrug establishment. Finally, in early 2003, we will begin renovations on ourmanufacturing facility. We are renovating our manufacturing plant to meet drugstandards, which should be complete in mid to late 2003. With pharmaceuticalguidelines in mind, we don't believe the impending GMPs will have a significantimpact on our business.

Kaufman: We are currently operating under the NNFA'sproposed GMPs for dietary supplements, which are much more stringent than theones currently in place and parallel food GMPs. We feel confident that we canrespond quickly to the new GMPs once they are finalized.

Koon: We are FDA drug licensed, NNFA cGMP-certified andkosher-certified, and have TGA certification pending. For us, any kind of FDAcertifications have already been met. However, I still think it will be quite awhile before FDA mandates or enforces GMPs for most nutritional manufacturers.

May: Yes, we are already operating under GMPs and havebeen for some time.

Rayman: Yes. As a company, we look forward to theimplementation of federal GMPs. We think it's important that the industry haveGMPs, and get rid of some of the less-than-reputable contract manufacturers thatare out there.

Schaeffer: We currently operate using GMPs and have noworries about the impending FDA GMPs. We do not foresee the FDA imposingstricter GMPs for dietary supplements as compared to OTC facilities.

Seals: Capsugel is cGMP-certified and manufactures allproducts in pharmaceutical-grade facilities.

Seow: I think all manufacturers should use GMPs and tryto comply with all FDA regulations. It is the customer's responsibility to visitthe contract manufacturer's facility to make sure they have GMPs in place.

St. Clair: Yes, we have two GMP certifications: NNFA andNSF. We have been working very closely with these two institutions to ensurethat if--and when--FDA issues final regulations, we will be in a good positionto make small changes.

Stallings: Merical Vita-Pak maintains drug licenses withthe state of California and FDA, and was the first contract packager to receiveNNFA's GMP certification. We encourage FDA to adopt a set of GMP guidelines forthe nutritional industry because Merical Vita-Pak is already operating understrict FDA standards, and we feel this will greatly increase our sales volume.

Udell: Yes, we are, and have been since our plant openedin 1995. I think the impending FDA GMPs will better level the playing field, aswell as raise the bar for all participants in our industry by establishingminimums that all companies will be required to operate by. Likewise, it willchallenge us to stay one step ahead of the competition because we already abideby the pending FDA GMPs and look forward to improving our quality systems andprocesses even further.

Wehling: We are currently operating under GMPs, as wegrew out of a pharmaceutical business into the nutritional products area. We donot think the impending GMPs will affect our operations at all, unless theproposed regulations are a significant departure from GMP regulations outlinedin CFR 21, Part 211. Currently, the concept of GMPs for the majority ofnutritional manufacturers is somewhat of a misnomer. There is not a recognized,regulated agency that has the ability, or the desire, to inspect nutritionalproduct manufacturers. The current GMP label is very loosely interpreted, withall companies claiming to operate under GMPs. This is a fairly simple statementto make, since FDA has no jurisdiction over inspection of production facilities.

Williford: Oh yes, absolutely. We have state and federaldrug manufacturing licenses, the NNFA GMP certification, and we've been auditedby USP and Shuster. As a practical matter, most of the large clients in theindustry have an audit team. So even though you may not have regulatorylicenses, sometimes the toughest scrutiny comes from your client's audit teamand QC people as opposed to state or federal regulatory agencies. It will notaffect us because we actually comply with all of those right now. But I can tellyou that it will probably force some people out of business or make them changethe way they do things. It's quite clear the evolution of this industry istoward pharmaceutical standard manufacturing; eventually it will be one and thesame. We saw that coming about six years ago and have responded accordingly.But, for people who have not done that, it's going to be very tough to catch up.

Yousuf: Kabco is currently operating under strict GMPguidelines. The implementation of FDA's GMPs, while they shall be adhered to,might induce a rise in cost that may eventually reflect on the product cost.

What challenges have you faced in light ofincreased homeland security measures?

Karim: Despite the increased government involvement inimport/export issues, our international business remains healthy.

Kaufman: The only issue that we have come across was arequest for confirmation regarding what the application was for one of theingredients we were dealing with. Other than that, the only issue thattemporarily held up the flow of goods was the dock workers' strike on the WestCoast.

Koon: There has been a slight increase in the time ittakes to import and export items.

Schaeffer: We have reviewed our material supplyrequirements and, when necessary, have entered into contractual agreements tosecure and maintain a steady flow of materials.

Seals: Capsugel has taken extra steps to help ensureproduct security for our customers and their consumers. We have made ourcustomers aware of the security enhancements made in the last year and a half.

St. Clair: We have implemented many security measures inour facility and how we do business. One item of concern was receiving outsidematerials from other countries; therefore, we will not receive any materialunless it has a wire tag that has not been broken or tampered with, and we sendout all products with security tape as an added measure.

Udell: The biggest hurdle we have run into in light ofthe increased homeland security measures is sometimes clearing raw materialsthrough customs. Many times, what used to take days now sometimes will takeweeks, and that increases the challenge to deliver finished goods in a timelymanner.

Williford: There have been three or four specificinstances. In some cases, there have been delays in getting some raw materialsthrough customs. Certainly, many clients did not previously ask for specifics onsecurity, access to the production site or computer security--those questionsare now being asked. They're also asking for contingency plans in the event oftransportation systems being disrupted or power plants blown up or somethinglike this. Raw materials is one area, and plant security and computer securityare others. They want to see written SOPs [standard operating procedures] as faras the contract manufacturer's security procedures. Most larger clients have nowspecifically requested SOPs addressing those areas.

Are there any particularly hot ingredients orcategories at the moment?

Karim: The year 2002 was full of hot ingredients,including Relora, Phaseolamin 2250 and coral calcium. In addition, due tothe controversy surrounding ma huang/ephedra, many of our customers haveswitched to synephrine-based products, which have the same thermogenicproperties as ma huang/ephedra formulas.

Koon: Non-stimulant weight loss raw materials andproducts--specifically CLA (conjugated linoleic acid).

May: Camu camu berries from the Amazon rainforest arevery hot. These berries are the richest known source of natural vitamin C. Camuconcentrate makes it possible for a manufacturer to offer substantial amounts ofvitamin C in just about any product without adding ascorbic acid.

Whole food nutrition is also growing rapidly. Natural productscustomers want whole, natural products--not fractionated or synthesizedcompounds. We are seeing this in an increased demand for phytonutrient-richsuperfoods such as wheatgrass, beet and carrot juices, sprout powders, algae,freeze-dried berry powders, whole herbs and medicinal mushrooms.

Rayman: Nothing much has changed. It's still weight loss.But we're doing more in sports nutrition than we've ever done before. That seemsto be the growing area. People are beginning to shy away from ephedra, but westill do some manufacturing with ephedra products. For the most part, most ofour customers are asking for alternatives.

Schaeffer: Since the report that multivitamin/mineralsupplements are beneficial for all adults, our production levels for these typesof product have dramatically increased.

Seals: Reformulation requirements for weight-lossproducts is one "hot" category presently. For our Licaps line ofproducts, fish oil derivatives are becoming increasingly popular.

Stallings: As a contract packager, we have seen atremendous increase in the packaging of powders as a delivery system forvitamins and other supplements. Sizes can range from a simple 1-gram packet to a2-ounce meal replacement pouch. Also, we have seen great growth in the need forsecondary packaging (i.e., shrinkwrapping, bundling, cartoning, clamshelling) asmarketers work to differentiate their products in the various retaildistribution channels.

Wehling: I really tend to try to look toward categoriesrather than ingredients. Categories generally encompass a broader market basethan do individual ingredients, and individual ingredients are sometimesdifficult to judge with regard to benefits because very few, if any, rawmaterial companies perform double blind, controlled studies with the ingredientsthey sell. A double blind, controlled study performed by an FDA-regulatedclinical laboratory currently costs between $150,000 and $250,000. Mostcompanies are not capable of, or willing to, spend this kind of money onclinical studies for a raw material for the nutritional product market.

Categories, on the other hand, are identifiable and trends doexist. One category that continues to perform well, and is growing every year,is the market catering to that portion of the population entering the retirementyears. Physicians in the mainstream recognize the importance and benefits ofcalcium, magnesium and vitamin D for improving bone density, and more and more,they are recognizing the benefits of joint supplementation, typically withchondroitin and glucosamine.

Another segment of the market that is growing and is somewhatgaining credibility is the "anti-aging" segment. There is particularinterest in growth factors, growth hormones, glandular extracts, and amino acidsand herbal ingredients that are designed to stimulate brain or other organactivity.

There are always companies looking to differentiate theirproduct lines with new dosage forms. Three of these seem to be most prominent inthe last year or so: 1) concentrated liquids that only require a very smalldose, often using a dropper; 2) fast dissolving, or "quick dissolve,"tablets that can be placed in the mouth and will disintegrate within 20 or 30seconds so the consumer does not have to swallow water to take the desiredproduct; and 3) effervescent powders and tablets, which can deliver to thebloodstream a large amount of active ingredient dissolved in a small amount ofwater. These are all highly portable dosage forms, and seem to fit well withconsumers' desires for fast action and convenience of use.

Yousuf: Weight loss still seems to be popular and newingredients to replace ma huang (ephedra) seem to be coming up.

What are the primary issues involved inworking with a contract manufacturer?

Bennett: Quality is the most important element of aproduct. But quality comes in different levels. You have the high quality thateverybody is looking for, expects and actually demands today in the marketplace.Then, there are the companies that make products with a "just gettingby" quality. And, there are the plants with the "don't ask don'ttell" policy. These products are never checked, and the seller could beunsure of quality. Today, the customer assumes that the highest quality is usedin dietary supplements.

Karim: It is best to contact contract manufacturers earlyin the product launch cycle, and it is important to notify the contractmanufacturer of your marketing and distribution plans. Severalingredients/products are not legal in certain states and/or countries, and mayrequire different labeling. By presenting this information to the contractmanufacturer early, customers can help in the label design and marketingprocess.

Kaufman: The primary issues include production capacity,quality control systems, overall finished product quality, reliability (as faras turn-around time is concerned), pricing and customer service.

Koon: Honestly? Being paid on time. Late payments affectcash flow. Seriously, I think the primary issues are related to quality andtimely performance.

May: Experience, quality, integrity and communication. Itis important to select a manufacturer that has experience with a variety ofmaterials. In this way, the customer won't need to spend a lot of time learningprocesses to complete a project or make costly errors when dealing with anunfamiliar material. The success of a final project depends upon the contractmanufacturer's personnel being experienced and properly trained. For purposes ofquality control, it is important that a contract manufacturer have aclimate-controlled facility--low humidity discourages the growth of microbes, asdoes proper air filtration. The contract manufacturer's equipment must also becompatible with the processes required to produce a product.

It is also very important to choose a contract manufacturer thatshares the customer's commitment to quality. To ascertain this, the customermust ask questions about the protocols and procedures the contract manufacturerimplements to ensure the safety and efficacy of a product. Solid two-waycommunication affects reliability and the success of a production run. There ismuch to coordinate in a contract production run to ensure its success. Not onlyshould contract manufacturers share information about themselves with thecustomer, but the customer must be timely and responsive to the manufacturer'srequests. It is not uncommon for companies to delay returning calls or providingpertinent information, samples or materials to their contract manufacturer. Thiscan disrupt an entire production schedule and lead to frustrating delays.

Rayman: Clarity of desire. If a customer can give us aclear, concise picture of what they want, then that's exactly what they'll get.

Seals: When working with a contract manufacturer, onemust take great care to make certain that all of the raw materials used inmanufacture of the product are equal or superior to the quality of the activeingredient.

Seow: Again, the customer needs to visit the contractmanufacturer's facility--often--to ensure products are being manufacturedaccurately and ethically, the way the customer would like. The customer thatsells the products has to know what's in the bottle, and that what is printed onthe label is accurate and is safe for consumption. It's the customer's name onthe line!

Stallings: The biggest challenge for any customer is toidentify with the packager what service the customer requires. This involves notonly the look of the finished product, but the quality, pricing and deliveryschedules.

Udell: Knowing up front what your expectations are andmaking that clear to the manufacturer. At SoftGel Technologies, we take aspecial pride in being a hands-on, full service manufacturer of custom softgelformulations. As with every relationship, however, it is important for allparties to communicate clearly what their goals and expectations are, so as toavoid unnecessary conflicts or missed deadlines.

Wehling: Issues that customers of contract manufacturersface are: 1) Does the contract manufacturer have the proven developmentcapability that is needed? 2) Is the company really capable of delivering theproduct desired in the quantities and of the quality expected? 3) Does thecontract manufacturer have a good reputation in the industry? 4) Does thecompany have personnel that can fully support the customer? and 5) To what levelof service can the contract manufacturer deliver to the customer (i.e.,development, quality control, package design, production, packaging, shipping,etc.) ?

It is much more efficient for the contract manufacturer to workwith one or two designated individuals within the customer's company, providedthose individuals have the responsibility and authority to fully control theproject that is undertaken.

Williford: From the client's perspective, I would thinksome of those items that we touched upon briefly to begin with. That would betheir QC procedures, their track record, do they have a drug license or not,actually going to see the facility--it's amazing how many people will just callup and order something and never take the time to see if you're actually workingout of a post office box or not. Customers need to take some time, do somehomework and investigate the manufacturer.

Yousuf: Some customers want the best quality product at acheap price. This combination is sometimes not possible to provide.

There are times when customers do not understand the entiremanufacturing process and, therefore, expect their orders to be filled withinfive days of issuing a purchase order. This can be an unreasonable demand attimes.